In this photo illustration a Burger King Whopper burger is displayed on April 05, 2022 in San Anselmo, California. A federal lawsuit has been filed seeking class-action status alleging fast-food chain Burger King misleads customers with images that depict its food, including the Whopper burger, as much larger than what it is. which is actually served to customers.
Justin Sullivan | Getty Images
International restaurant brands released a strong fourth quarter on Tuesday and named chief operating officer Joshua Kobza as its new chief executive, effective March 1, replacing Jose Cil.
“Over the past few years, the Board has worked with management to develop a thoughtful succession plan for key positions, so this is a natural transition for Josh to lead our next phase of growth,” President Patrick Doyle said in an announcement Tuesday. .
Cil will stay with the company for a year as an advisor to help with the transition.
The management change comes as the company strives to relaunch and expand some of its key restaurants. Restaurant Brands includes Burger King, Tim Hortons, Popeyes and more recently Firehouse Subs.
The company reported a slight revenue shortfall, but beat revenue against analysts’ expectations. As the company enters its new fiscal year with a new CEO at the helm, it is preparing for “an accelerated pace of growth for the next five to 10 years,” Doyle said on a call with analysts.
Kobza has yet to set out his official priorities as the new CEO, but told CNBC he believes the company can “grow much faster in our international markets” and wants to give each of the four brands the company “more autonomy” to invest in new areas. as they see fit.
Shares of the company closed more than 2% lower in trading on Tuesday, despite the largely upbeat report.
Here’s how Restaurant Brands performed in the fourth quarter, versus what Wall Street had expected, based on an average of analyst estimates compiled by Refinitiv:
- Adjusted earnings per share: 72 cents versus 74 cents
- Income: $1.69 billion vs $1.67 billion expected
For the three months ended Dec. 31, the company reported net income of $336 million, or 74 cents per share, compared with $262 million, or 57 cents per share, a year earlier.
Quarterly revenue of $1.69 billion marked an increase of about 9% year over year.
Restaurant Brands reported overall comparable store sales growth of 8% in the fourth quarter and system-wide sales growth of nearly 12%.
Its flagship burger chain, Burger King, reported same-store sales growth of 8.4% during the period. In the United States alone, sales increased by 5%. The Burger King chain’s domestic sales have plummeted, especially as some franchisees struggle. Earlier this year, a Burger King franchise operator with locations in four states filed for bankruptcy.
The company has worked to rejuvenate Burger King’s domestic sales and in September announced a $400 million investment plan to boost Burger King’s advertising campaigns and renovate the chain’s restaurants.
At the end of the fourth quarter, the company said it had funded $30 million of this turnaround plan. Restaurant Brand executives said on a call with analysts that while they are pleased with the early results of the turnaround, they still have “real progress that we need to make to continue driving growth.”
The company previously said it expected to reap the benefits of the turnaround in 2025.
Joshua Kobza, former chief financial officer of Restaurant Brands International Inc., speaks during a Senate Standing Subcommittee on Investigations hearing in Washington, DC, U.S., Thursday, July 30, 2015.
Andre Harrer | Bloomberg | Getty Images
Tim Horton’s same store sales increased 9.4% during the period. In Canada alone, the coffee brand’s same-store sales increased 11%. The chain has expanded internationally, particularly to Texas and Florida to target Canadians traveling to warmer climates for the winter.
Popeyes saw same-store sales increase 3.8%. The chain, which experienced a surge in sales with its 2019 debut of its chicken sandwich, has since leveled off and only recorded 1.5% growth in the United States.
Restaurant Brands added Firehouse Subs to its portfolio in 2021. The chain saw same-store sales increase 0.4% during the period.
Restaurant Brands has not been immune to rising costs and industry-wide losses in China and Russia. The company said it suffered less from the Covid-related disruptions during the fourth quarter, although it noted that it had to temporarily close some of its restaurants in markets like China which have seen a resurgence of case.
He also said he didn’t generate any new profits from Russia in 2022, nor does he expect any in 2023. Last year, the company suspended support for a major franchise. Burger King in the country in light of Russia’s invasion of Ukraine.
Covid and the war in Ukraine created a challenging macro environment for the business due to currency headwinds and rising interest rates. Restaurant Brands said Tuesday it expects “a negative impact on our business” if it cannot adjust prices to offset rising costs.
“We’re starting to see some moderation in inflation, which is really helpful,” Kobza told CNBC. He said the company would be “thoughtful and careful” in considering its future pricing strategy.
So far, rising prices in the domestic market have not scared off the company’s consumer base. Fast food companies in the industry have seen an increase in demand among budget conscious customers, beating fast and casual dining options.
Yum Brands announced a strong fourth quarter last week, mainly supported by its Taco Bell segment, as weak sales in China weighed on Pizza Hut and KFC. The company attributed the American momentum to its chains’ affordable options.
Similarly, McDonald’s benefited from shifts in consumer behavior with an increase in fourth-quarter revenue fueled by higher menu prices and increased demand.
